LIC creates separate structure for bancassurance

Life Insurance Corporation of India (LIC) has created a new structure for marketing of its insurance products through banks and other alternate channels.

It plans to increase the share of premium income collected from alternate channel to 5 per cent in 2005-06 from just over one per cent last year.

LIC has promoted S Vishwanathan, chief (marketing), as executive director, alternate channels, to exploit the business potential from alternate selling channels.

Alternate channels marketing heads have also been appointed at all divisional levels, the public sector life insurer's chairman R N Bhardwaj said after signing a memorandum of understanding with Dena Bank.

LIC's first premium income in 2004-05 was Rs 15,840 crore, of which only about Rs 200 crore accrued through alternate channels. Bhardwaj said the average premium per policy for sales through alternate channels is much higher at Rs 13,469 against Rs 3,100 for policies sold through traditional channels.

Also, the alternate channels provide higher average sum assured at Rs 1.80 lakh against the usual average of Rs 75,000.

With the MoU with Dena Bank, LIC now has tie-ups with 32 banks for selling of their products. The other banks with whom LIC has bancassurance arrangements include Corporation Bank, Central Bank of India, Oriental Bank of Commerce and Bank of Punjab.

Dena Bank chairman M V Nair said it will initially sell LIC products at 125 branches and scale up to 500 branches over three years. The first year target is to collect a total premium of Rs 50 crore.

Nair said the tie-up will help the bank design structured products for high networth individuals and also package life insurance with savings bank, deposit and loan accounts.